How are medicines priced?

The drug price management model of the world's major countries can be divided into four categories: Category 1: direct pricing of drugs. It is further divided into two types: one is based on the cost of drug production and efficacy, safety and other factors of direct pricing. This method is used mainly in Italy, Spain, France, Japan, Switzerland, Australia, India, Romania, Brazil and other countries, characterized by a deep degree of price intervention and a small degree of corporate autonomy. Another is in accordance with the actual price level of neighboring countries in the market, the calculation of the average price after direct pricing. The main ones that use this method are the Netherlands, Canada and so on. These countries generally rely on imports of drugs, the production of domestic drugs in small quantities, and therefore use this method. The second category: setting reference prices. The price of a certain drug in the same therapeutic group is the reference price for the reimbursement of each drug in the group, and the part exceeding this price has to be paid by the patient. Countries adopting this pricing method include Germany, Sweden, Denmark, New Zealand and Colombia. This method takes into account the quality differences of similar drugs, giving consumers more choice, and manufacturers also have a certain degree of pricing freedom, according to market demand and the product's own characteristics. In the reimbursement price above to find a more reasonable price positioning. The third category: indirectly control the price of drugs by controlling the profitability of drug production. This method is mainly used by the United Kingdom. This method is characterized by the convenience of government management; the disadvantage is that if the profit rate control is too strict, it is not conducive to encourage the enthusiasm of drug producers. The fourth category: not directly set drug prices. The representative country is the United States. The complete medical insurance system of the United States is an important guarantee for the implementation of this system. Although drug prices are not controlled by the government, in essence, private insurance organizations replace the government's functions and intervene in drug prices. In this way, although it increases the burden of patients' payment, at the same time, it greatly encourages the incentives of production enterprises to research and develop new drugs. So between 1975 and 1994, 45% of the 152 new drugs in the world came from the United States. During the rapid development of biotechnology in the 1990s, 80% of the 150 biotechnology patents issued by the United States in 1995 came from this country. The drug price management models of major countries in the world can be categorized into four types: Type I: Direct pricing of drugs. It is further divided into two types: one is direct pricing based on the cost of drug production and factors such as efficacy and safety. This method is mainly used in Italy, Spain, France, Japan, Switzerland, Australia, India, Romania, Brazil and other countries, which is characterized by a very deep degree of price intervention and little autonomy of enterprises. Another is in accordance with the actual price level of neighboring countries in the market, the calculation of the average price after direct pricing. The main ones that use this method are the Netherlands, Canada and so on. These countries generally rely on imports of drugs, the production of domestic drugs in small quantities, and therefore use this method. The second category: setting reference prices. The price of a certain drug in the same therapeutic group is the reference price for the reimbursement of each drug in the group, and the part exceeding this price has to be paid by the patient. Countries adopting this pricing method include Germany, Sweden, Denmark, New Zealand and Colombia. This method takes into account the quality differences of similar drugs, giving consumers more choice, and manufacturers also have a certain degree of pricing freedom, according to market demand and the product's own characteristics. In the reimbursement price above to find a more reasonable price positioning. The third category: indirectly control the price of drugs by controlling the profitability of drug production. This method is mainly used by the United Kingdom. This method is characterized by the convenience of government management; the disadvantage is that if the profit rate control is too strict, it is not conducive to encourage the enthusiasm of drug producers. The fourth category: not directly set drug prices. The representative country is the United States. The complete medical insurance system of the United States is an important guarantee for the implementation of this system. Although drug prices are not controlled by the government, in essence, private insurance organizations replace the government's functions and intervene in drug prices. In this way, although it increases the burden of patients' payment, at the same time, it greatly encourages the incentives of production enterprises to research and develop new drugs. So between 1975 and 1994, 45% of the 152 new drugs in the world came from the United States. In the 1990s, the rapid development of biotechnology, the United States in 1995 issued 150 biotechnology patents, 80% from the country.